‘Poor power supply not good for business’

Despite the privatisation of the Power Holding Company of Nigeria (PHCN), there has been no improvement in electricity supply. Companies are still generating their power or relying on generators. This is not good for business, says Mr. Kayode Oluwasegun-Ojo, Managing Director of Nigerian Aviation Handling Company (NAHCo) Plc. In this interview with KELVIN OSA-OKUNBOR, he argues that inadequate power is a “private-sector problem, which is affecting NAHCo a bit”, adding: “We sincerely hope that with the privatisation of power, we will see its impact on our cost profile and we can become more profitable and give our shareholders more dividends”.

That has been the experience running NAHCo, after 35 years of its existence?

It is a remarkable feat that the company is still doing well after all these years. Many companies that started about the same time have fallen out of business.

Though I was not here when the company started, it has come a long way in doing what it knows how to do best. That is just the first perspective, general business, in relation to an industry where we provide a service, in the aviation industry.

I would like to remind stakeholders that the aviation is about the youngest service industry around the world, compared to either the banking industry or others.

Even, the brewing industry is older. The aviation industry started about the time the first aircraft was airborne.

In Nigeria, KLM Airlines is about the oldest. So, if you situate the 35 years of existence of NAHCo within the context of how old the aviation industry is in Nigeria, you will agree that the company has done well.

What factors are you using as the benchmark for performance?

Generally speaking, I think aviation in Nigeria has done well. Just as NAHCo in the period under review has done well also.

One of reasons we believe we have done well is the industry is international and we have carried out operations within the parameters of international standards . We have transformed over the years from being a former state-owned enterprise to a publicly owned company.

The government used to own 60 per cent equity in NAHCo.

But today, the company is fully quoted on the Nigerian Stock Exchange and has alliance with an international brand – the Aviance Group, a global leader in ground handling. Our alliance partner operates in over 117 airports across the world.

We have after the privatisation of the company obtained and retained the international ground handling certification – ISAGO certification.

As a global leader in the business, others have followed us in Nigeria to pursue same certification.

NAHCo is the first in West Africa to secure the ISAGO certification.

What are your plans?

Our plans for the future is to continue the transformation by diversifying into other areas of related business as well as expanding along the West and Central African Coast to replicate similar business of ground handling and passenger ramp services .

We are planning to extend to these countries what we have done successfully in Nigeria since the past 35 years.

What has been the winning strategy for NAHCo after its privatisation years ago?

The hand of God has been upon this company. This is aptly so because I am a man of faith. The second factor NAHCo has moved from one level of accomplishment to another is the corporate policy of insisting on certain standards of services we render.

We follow as much as possible high standards of corporate governance. This has helped us to finetune our processes even in the recruitment of key persons from competitive sectors of the economy .

In NAHCo we pursue issues that are value based. This singular strategy has accelerated the growth of NAHCo. It moves in the direction where it can yield returns on investments.

So, we always look out for what will give us the best in Nigeria; that I think is responsible for our achievements as a company.

What is the relationship between the level of success and adherence to the principles of corporate governance?

We have policies that are value driven. This is how we pursue the policy of corporate governance in our operations.

About four years ago, NAHCo voluntarily invited a team from the International Air Transport Association (IATA) to put in place the process that led to our international certification.

That, for us, is a strategy for international benchmarking. Iy required opening up our operations to a lot of standards, rigours and that has helped us to achieve some success.

We have also done some local adaptations, but it does not tamper down the standards of our operations. All these have helped us to attain some level of success.

In our line of business, the minimum standards of safety must be maintained for our clients, who insist on global standards anywhere their aircraft require handling by our personnel.

We must not compromise on safety and security of our operations . We must strive at all times to keep to our operational standards .

What is the relationship between NAHCO and Nigeria Customs Service at the Lagos Airport, in view of the recent closure of your bonded warehouse over allegations of poor documentation of cargo?

We are working hard to engage all stakeholders in the sector including the Nigeria Customs Service. Last year, the warehouses of NAHCo and SAHCOL were shut down over a lot of procedural issues, and the processes of running the warehouses.

After that experience, we sat down with officials of Customs and other stakeholders, including cargo and clearing agents, and signed a memorandum of understanding stating how we would operate, including the dos and don’ts.

From that time till date, we have been adhering to the template of the agreement we signed as a guideline.

One thing I want us to take on board is that if you operate in a bonded Customs warehouse as we do, there must be some level of cooperation between all operators and personnel of the Customs. Such cooperation NAHCo has enjoyed in the past 35 years and will continue to enjoy.

So, we work hand-in-hand with them to ensure things are done properly in line with international standards. We would ensure that neither NAHCo nor Customs loses out to other stakeholders.

How has the influx of foreign airlines, especially since 2008 impacted on your business? What is your projection for the future?

We are in the secondary end of the value chain; the primary decision to fly an airline is taken by passengers and the primary decision to consign goods is taken by a consignee. We do business with the airlines; we are the service providers and not at the retail end. However, of the over 30 foreign airlines that come in, we handle 85 per cent of them including their cargoes. You are right that since 2008, a lot of airlines have come in and I would say we have been able to maintain the same ratio in terms of keeping ourselves at that top.

On outbound passengers, we will still benefit because we are at the secondary end of the market. As far as we still remain a prosperous country of 170 million people, who have the means to fly for leisure, business and education, we are still on ground as it were to deal with the request of the airlines to be carrying those passengers. In fact, we will say that our joy will be to see a lot more of local participation without compromise for international standards. Our pride in nahco is that we are a Nigerian company; we have been working with foreign airlines for 35 years, delivering services in a local context, but with international standards.

What are the major challenges confronting your business?

This is not a nahco alone problem, but a significant problem for the private sector. It has affected us a bit. We run several generators and provide some infrastructure around the airports such as Closed Circuit Television (CCTVs), and a lot of other things. At the end of the day, because the primary issue in this industry revolves around safety and security, we cannot but do these things because if we don’t, we might not be in business.

If you look at our results in 2011 and 2012, at the profit and loss, you will see that we have been spending lots of money to maintain those things. It’s part of the cost of doing business, but we sincerely hope and pray that with the privatisation of power and other reforms being undertaken by the Federal Government, we will see the impacts of those things on our cost profile and we can become more profitable and give our shareholders more dividends.

How secured are your warehouses across the country?

We have moved away from the manual disposition of the pre-2010 era. We are using technology and have recorded a lot of gains. For obvious reasons, I won’t tell you more than that. We are no longer relying on human beings to find out when things occur. This has prevented a lot of things; it has also detected a lot of things. If you go to our Lagos warehouse, you will notice that there is an inscription that says “this place is covered by CCTV.” You can do whatever you like, but we will definitely catch up with you.

How are you tackling the challenge of luggage delay at the airport?

There are a few clarifications we have to make in this area. First of all, we are a ground handling company, which means we provide service at an infrastructure owned by the Federal Government. So, we do not own the carousels, which take the luggage to customers. However, we have strict service level agreement with our airlines and I am somebody who flies pretty regularly and I also have people who do mystery shopping for us in nahco. I want to tell you that in the last five to six months, there have been significant improvement in terms of timing of when people get their bags. However, if there is power outage in the whole of a terminal building, that remains a challenge. But in terms of people getting out their baggage on time, I believe this has improved significantly.

How do intend to extend the frontiers of the business in Africa and beyond?

In terms of the geographic expansion, it our plans for expansion will be aviation and aviation related areas of business.

One of the best ways to solve a problem according to mathematics is to move from the known to unknown areas.

So, our approach is to start from what we know , which is aviation ground handling into other areas of business.

In the first instance, we will stay within our industry competence, before we will seek to enlarge other opportunities, as they present themselves on a case by case basis.

NAHCo is one of the few companies that are successful after privatisation and is one of the few publicly quoted in aviation industry. What is the relationship with shareholders?

The first objective of a company is to preserve and build value. This exactly we have done. The performance of the company is good in the stock market.

We have tried to keep faith with our shareholders. We are a profit oriented company. In 2005, nahcoaviance was privatized and subsequently listed on The Nigerian Stock Exchange in 2006. The company is now owned by over 80, 000 shareholders, including two international airlines – Air France and Lufthansa; as well as local investors; Sycor Private Investment Limited and Rosehill Group Nigeria Limited. The company’s stock exchange symbol is “Nahco”.

We have always place the interest of our shareholders first and we try to satisfy them. We pay dividends. Though the shareholders will always ask for more. We have the confidence of our shareholders. The performance of the company in the stock exchange is ok.

NAHCo has a strong alliance with aviance. How has that impacted your business?

Nahco has developed strategic global alliances through its membership of aviance, the alliance of 10 reputable airport service providers operating from 112 stations in 17 countries. We have a cordial relationship with our partners and we have abided by the MoUs we have with them. The partnership has made us a global player and helped us to maintain international standards. The partnership has helped to train our staff.

How much has the company invested on training and equipment?

Prior to transformation the budget for training and equipment was small. But, we have increased that now significantly.

We have invested more than $50 million in equipment and modernising our warehouses. Training has helped us to retain our international clients. In the last three to four years, we have invested more than N600 million on local and international training of our staff. We are a service provider and so, training is key. We provide value and build value through training.

When I took over as the Chief Executive of the company, most of the company’s equipment were more than 20 to 30 years old. In the last three years we have invested heavily in equipment and I am proud to say that our equipment are now less than three years old.

What is your market share of the ground handling operation market?

There are many airlines that fly into Nigeria. We remain the leader in the market. We have achieved this through innovation, trust and integrity.

We are the first company to expand facilities and pursue certification. Our competence and integrity have helped us to remain the leader in the market. We are passionate about service as a company. We will continue to leverage on improved services as a way of retaining our position as a leader in the service sector. This has helped us to maintain a leading position.

We control 85 per cent of the ground handling operations. The company serves more than 35 airlines at seven airports across Nigeria, with plans to expand operations to other African countries.

What are the biggest challenges?

Infrastructure at most of the airports. Power supply is the biggest challenge. It has increased the cost of operations. We are hopeful that with privatisation of the power sector, things will improve. We are also recommending to the government that there should be an independent power project for the airports. This will enhance power supply to the airports.

Also as a leader in ground handling operations in Nigeria, we are the target of attacks by our competitors We are, however, not averse to healthy competition.